Employee benefits are increasingly becoming an expectation. According to a survey from the Society of Human Resource Management (SHRM), more than 60% of employees feel that the benefits package they receive is a significant contributor to their overall job satisfaction; strip all those added extras away, and there’s a good chance some of them would start hunting for a new job.
A well-thought-out benefits package is no longer a nice-to-have, it’s a must. If you’re serious about attracting and retaining top talent – the kind of employees who will stick by you and propel your business forward – you’ll need to give your employee benefits some serious consideration.
But that can be easier said than done. Because there are so many different types of benefits out there – and because every workplace and every employee is different – choosing which benefits to offer (and how to implement them) can be quite a challenge.
That’s why we’ve created this quick and easy small business guide to employee benefits. Below, we’ll explain what employee benefits are and define the different types, cover the advantages they can bring to your company and explain how they work.
Simply put, they’re measures an employer can take – separate from salary – to reward employees for their hard work and recognise their contribution to the company.
The purpose of employee benefits is twofold: they help companies attract leading talent from across their industry, and they make it easier for them to retain that talent.
If you were offered two jobs at the same time, both with the same salary, but one offered a comprehensive healthcare package and the other one didn’t, which would you choose? No-brainer, right? And when you consider just how competitive the job market is nowadays thanks to the rise of online job listings and remote working, the role of employee benefits becomes even more crucial. Without them, it’s tough for employers to stand out.
In terms of retention, the right employee benefits can help remind your team that the grass isn’t always greener on the other side. If you offer an amazing selection of benefits that your rivals don’t, you’re far less likely to lose your star employees.
Employee benefits fall into one of two main categories: statutory and fringe benefits.
Statutory benefits are mandatory under UK employment law – so they’re not exactly worth shouting about on your Indeed listings! Nevertheless, they remain an important consideration for small businesses – and a lot of companies use statutory benefits as the basis for added extras (like increasing the number of annual leave days beyond the legal minimum requirement).
Statutory benefits here in the UK include:
This is where things get interesting – added extras you can use to really make your business stand out on the job market. Otherwise known as voluntary benefits, fringe benefits are entirely optional and aren’t mandated by law. There are hundreds of different types of fringe benefits out there to choose from, but popular options include:
We’ve already touched on some of the advantages of employee benefits, but if you’d like a more comprehensive overview, check out our recent blog on the subject.
In it, we look at survey data and draw on our experience of working in HR for more than two decades, giving you a close look at the real-world impact employee benefits can have on a business.
Ready to start looking more closely at the path towards implementing employee benefits in your business? There are a few things you should keep in mind before you begin.
Your first job is to work out which benefits would make the biggest difference to your existing team – and the kind of people you’re looking to recruit in future. For instance, there’s little use in offering enhanced maternity and paternity leave if everybody in your team already has children (or doesn’t plan to have any).
The best way forward is to just ask your team for their thoughts. Come up with a list of benefits you could reasonably implement and ask for their opinions: which ones would have the greatest impact on their lives?
Yes, this is absolutely possible – but it needs to be done correctly. Employee benefits can be differentiated across your team for business reasons, but if two employees doing essentially the same job receive different benefits, this could be classed as discriminatory.
For instance, it would make sense to give a travelling sales representative a company car – but if you have multiple people in that role, you’d have to give all of them a company car. You wouldn’t, however, be required to give a company car to someone that doesn’t travel as part of their day-to-day.
Some employee benefits are taxable and some aren’t. For instance, company cars and healthcare benefits (like private health insurance and gym memberships) are usually taxable here in the UK, while training courses and enhanced pension contributions typically aren’t.
At the end of the day, you’re running a business – and your employee benefits package still needs to make financial sense.
Some tax-free or low-tax benefits (like salary sacrifice schemes and workplace training courses) can offer significant advantages with relatively low upfront costs, but it’s important to consider the return on investment you’re likely to receive, not just the implementation cost.
When weighing up the impact of each benefit, place it in context with data on recruitment, retention, productivity and employee feedback. Has it made a measurable difference since you implemented it, and are your employees actually taking advantage of it?
By testing benefits over time and working out which ones boost your team’s performance and which don’t, you can gradually build a package of benefits that works for you and your team.
If you’re not sure where to begin and need expert advice you can depend on, turn to the team at Vero HR today. With more than two decades of hands-on experience implementing and refining employee benefits packages for organisations across the UK, we’re here to help make the process as simple as possible for you.
Find out more about our employee benefits consulting services today, or get in touch with our team to schedule a free introductory call.
